Correlation Between InspireMD and Bioelectronics Corp

Can any of the company-specific risk be diversified away by investing in both InspireMD and Bioelectronics Corp at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining InspireMD and Bioelectronics Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between InspireMD and Bioelectronics Corp, you can compare the effects of market volatilities on InspireMD and Bioelectronics Corp and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in InspireMD with a short position of Bioelectronics Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of InspireMD and Bioelectronics Corp.

Diversification Opportunities for InspireMD and Bioelectronics Corp

0.09

Correlation Coefficient

InspireMD  Bioelectronics Corp

Significant diversification

The 3 months correlation between InspireMD and Bioelectronics is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding InspireMD and Bioelectronics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bioelectronics Corp and InspireMD is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on InspireMD are associated (or correlated) with Bioelectronics Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bioelectronics Corp has no effect on the direction of InspireMD i.e., InspireMD and Bioelectronics Corp go up and down completely randomly.

Pair Corralation between InspireMD and Bioelectronics Corp

Given the investment horizon of 90 days InspireMD is expected to generate 10.91 times less return on investment than Bioelectronics Corp. But when comparing it to its historical volatility, InspireMD is 5.33 times less risky than Bioelectronics Corp. It trades about 0.06 of its potential returns per unit of risk. Bioelectronics Corp is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  0.06  in Bioelectronics Corp on October 10, 2024 and sell it today you would lose (0.03) from holding Bioelectronics Corp or give up 50.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

InspireMD  vs.  Bioelectronics Corp

InspireMD

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in InspireMD are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, InspireMD may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Bioelectronics Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bioelectronics Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating technical and fundamental indicators, Bioelectronics Corp disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with InspireMD and Bioelectronics Corp

The main advantage of trading using opposite InspireMD and Bioelectronics Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InspireMD position performs unexpectedly, Bioelectronics Corp can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Bioelectronics Corp will offset losses from the drop in Bioelectronics Corp's long position.

The idea behind InspireMD and Bioelectronics Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.